1. Business Strategy Introduction to Strategy Session 1 1

2. What is Strategy? We hear the word ‘Strategy’ or ‘Strategic’ almost every day either at work or in the news. Overleaf is just a few examples collected this week. 2

3. How is the word strategy used? “We need to change our strategy…………” “ A strategic direction for the firm is required………..” “A strategically different approach will be undertaken…………….” 3

4. Strategy in context? “The situation in Afghanistan is serious, but success is achievable and demands a revised implementation strategy, commitment and resolve, and increased unity of effort.”General McChrystal US Army. www.bbc.co.uk “Jenson Button uses 3 stop strategy to win second successive grand prix” www.bbc.co.ukwww.bbc.co.uk “New 10 year Rail Strategy to be introduced.” www.bbc.co.uk 4

5. Definitions of Strategy Johnson and Scholes (Exploring Corporate Strategy) define strategy as follows:Exploring Corporate Strategy) "Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". 5

6. Strategy and Governments 6

7. Governments use strategy to: – Set education, health, transport or economic priorities – Tackle emergencies such as health pandemics( e.g. Swine Flu, disasters, terrorist attacks) – Set foreign policies – Encourage trade – Tackle climate change 7

8. Strategy and the Military 8

9. The military use strategy to: – Identify key targets – Plan logistics – Secure defences 9

10. Strategy and Multinational Companies 10

11. Strategy and Multinational Companies Multinational firms use strategy to: – Attack rival companies – Acquire new businesses – Enter new markets – Reposition the firms direction 11

12. Strategy and Small Firms 12

13. Strategy and Small Firms Small firms use strategy to: – Grow their business – Enter new markets – Market their products 13

14. Question: Consider Microsoft. – What are Microsoft’s main business areas? – Who are Microsoft’s main competitors? – What kind of strategic decisions may Microsoft make in the next few years. 14

15. Strategy is about…… Where is the business trying to get to in the long-term (direction) Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope) How can the business perform better than the competition in those markets? (advantage)? 15

16. Strategy is about…… What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)? What external, environmental factors affect the businesses' ability to compete? (environment)? What are the values and expectations of those who have power in and around the business? (stakeholders) 16

17. Vocabulary of Strategy Mission Vision Goal Objective Strategic capability Strategies Business model Control 17

18. Levels of Strategy Corporate Level Strategy Business Level Strategy Operational Strategy 18

19. Levels of Strategy Strategies exist at several levels in any organisation - ranging from the overall business (or group of businesses) through to individuals working in it. Corporate Strategy - is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the business. Corporate strategy is often stated explicitly in a "mission statement". 19

20. Levels of Strategy Business Unit Strategy - is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc. Operational Strategy - is concerned with how each part of the business is organised to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc. 20

21. How Strategy is Managed? - Strategic Management In its broadest sense, strategic management is about taking "strategic decisions" - decisions that answer the questions above. In practice, a thorough strategic management process has three main components, shown in the figure below: 21

22. How Strategy is Managed? - Strategic Management 22

23. Strategic Analysis This is all about the analysing the strength of businesses' position and understanding the important external factors that may influence that position. The process of Strategic Analysis can be assisted by a number of tools, including: – PEST Analysis - a technique for understanding the "environment" in which a business operates – Scenario Planning - a technique that builds various plausible views of possible futures for a business – Five Forces Analysis - a technique for identifying the forces which affect the level of competition in an industry 23

24. Strategic Analysis Market Segmentation - a technique which seeks to identify similarities and differences between groups of customers or users Directional Policy Matrix - a technique which summarises the competitive strength of a businesses operations in specific markets Competitor Analysis - a wide range of techniques and analysis that seeks to summarise a businesses' overall competitive position Critical Success Factor Analysis - a technique to identify those areas in which a business must outperform the competition in order to succeed SWOT Analysis - a useful summary technique for summarising the key issues arising from an assessment of a businesses "internal" position and "external" environmental influences. 24

25. Choice and Implementation Strategic Choice This process involves understanding the nature of stakeholder expectations (the "ground rules"), identifying strategic options, and then evaluating and selecting strategic options. Strategy Implementation Often the hardest part. When a strategy has been analysed and selected, the task is then to translate it into organisational action. 25